Professional Indemnity Claims Examples

McKenzie Ross Insurance broking & risk management

Don’t think it can happen to you? Here are some recent real life claims examples provided by one of our insurance partners Prorisk Underwriting.

Real Estate Agent Claim 1

A Real Estate Agent sold a caravan park and business to the Plaintiff. After the transaction was completed, the Plaintiff discovered that the boundaries of the property were incorrectly described in the contract and that some of the caravan sites were not located on the land that had been sold.

The Plaintiff commenced proceedings against the Vendor, the Real Estate Agent and the solicitor that acted for the Plaintiff on the purchase of the property.

The Real Estate Agent argued that any representations that were made in relation to the land were those of the Vendor and that it merely passed on the instructions it had received from the Vendor.

There were however, allegations that the Real Estate Agent had represented the boundaries of the property when the Plaintiff inspected it.

The matter settled with the Real Estate Agent paying $40,000, but with defence costs of $80,000.

Real Estate Agent Claim 2

A Real Estate Agent managed a shopping centre. The lights to the toilet were controlled by a pre-set timer switch. The owner of the shopping centre had set the switch to turn the lights off at 6:30pm. The Plaintiff attended the shopping centre after hours to see his friend, who was a tenant of one of the shops. At 9:30pm the Plaintiff went to the toilet and on the way back to his friend’s shop he fell down the stairs and injured himself because the lights were not on. The Plaintiff sued the owner of the shopping centre and the Real Estate Agent.

The Court found in favour of the Plaintiff and awarded him $160K. The Court held that the owner was 100% responsible for the Plaintiff’s injuries because they had set the timer switch. The owner appealed this decision.

The Court of Appeal also found in favour of the Plaintiff, but reduced the award to $120K because the previous judge had incorrectly calculated the damages. The owner was held 40% liable and the Real Estate Agent was now held 60% liable on the basis that the Managing Agent was responsible to ensure the premises were safe. This decision was made despite the fact that there had never been a complaint or other incident in relation to the timing of the light switch.

The Real Estate Agent appealed to the High Court and the matter settled on the basis that the owner and the Managing Agent agreed to pay the Plaintiff on a 50/50 basis and to bear their own costs (which were significant).

Issues Faced By Real Estate Agents:

  • Has the Real Estate Agent done what it was contracted to do;
  • Has the Real Estate Agent acted to the standard of a “reasonably qualified” Real Estate Agent in performing its duties, or was it negligent;
  • Was the loss was caused directly by the actions of the Real Estate Agent.


Surveyor Claim

The Plaintiff entered into a contract with a builder to renovate her house. The renovation works included the re-stumping of the house. The builder sub-contracted the re-stumping of the house. The re-stumper requested the Surveyor to provide a building permit in relation to the re-stumping.

The Plaintiff claimed that the re-stumping works were defective and sued the builder. The builder joined the re-stumper and the Surveyor to the proceedings.

The case settled as the builder went into liquidation and the re-stumper had no insurance and no money. The Surveyor paid $20,000 as he had not adequately checked the depth of the stump holes for the re-stumping of the house.

Issues Faced by Building Surveyors:
  • Whether the Building Surveyor acted to the standard of a “reasonably qualified” Building Surveyor or was negligent;
  • Whether the loss was caused directly by the actions of the Building Surveyor;
  • Whether the Building Surveyor can rely on a statutory immunity. In some states a Building Surveyor/certifier is immune from liability where it has obtained a compliance certificate in the appropriate form.
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